Wealth from Wisdom

How to Turn Your Savings and Investments into an Income Workhorse!

October 21, 2017
Wealth from Wisdom
How to Turn Your Savings and Investments into an Income Workhorse!
Chapters
Wealth from Wisdom
How to Turn Your Savings and Investments into an Income Workhorse!
Oct 21, 2017
Carson Wealth
Show Notes Transcript
Traditional “go-to” options for generating income are dead. Pensions are all but history. Rates on CD’s and savings accounts are low. Bond yields aren’t any better. Investing in stocks right now is potentially risky And life expediencies keep getting longer, and longer. Don’t just have a retirement plan. Be sure you have a strategy to generate income from a handful of diversified sources.
Speaker 1:
0:00
Okay, and here's the legal Mumbo jumbo. The opinions voiced and wealth from wisdom with Rod Carson or for general information only and are not intended to provide specific advice or recommendations for any individual to determine what is appropriate for you. Consult a qualified professional. All indices are unmanaged. I may not be invested into directly. Investing involves risk including possible loss of principle. No strategy assure success or protects from loss. Past performance is no guarantee of future results. Advisory Services offered through Cwm LLC, an SEC registered investment advisor.
Speaker 2:
0:31
This Doug market hit another all time records as much as $10 billion in social security benefits go unclaimed every single year. The Federal Reserve announced that they will raise interest rates by 250 the skyrocketing cost of healthcare and retirement could now run 350,000 planning for retirement today is a whole new ballgame. It's loaded with challenges, obstacles, and trap doors that you can do this and we can be your guide. Welcome to wealth from wisdom with bear and hall of Fame Advisor, Ron Carson. Straightforward and objective advice and how you could make your money go further in retirement. And now here's your host, Ron Carson.
Speaker 3:
1:09
If you're retired now are planning to retire anytime in the next several years, you might have a problem. And what does that problem you ask? Well, you know it. It's generating income in retirement. Welcome to wealth and wisdom. I'm Ron Carson, your host with my cohost Paul West. Your ability to turn your savings and investments into income could totally and we'll totally dictate your lifestyle that you live in retirement. It could mean the difference between you doing anything and everything you've dreamed of first was running through your entire life savings far too soon, having too much life at the end of the money. With interest rates at record lows and the stock market making record after record in life expectancies getting much longer. Generating income. Retirement may prove to be the largest challenge of all. And unfortunately the old traditional go to options of yesterday are dead. Pensions are all bet.
Speaker 3:
2:16
History rates on CD's and savings accounts are an absolute joke. Bond yields aren't a heck of a lot better. Although we'll talk about a solution today in that area. And we may have you notice I said may cause nobody knows for sure a fully valued stock market. I can tell you one thing, we know it's not at a huge discount like it was in 2008 so you may be saying, okay, you've told me all the problems. What's the answer? Well, believe it or not, I think you have a lot more options than you realize. In fact, there are some surprisingly attractive options that you're probably didn't even know exist. So what Paul are going to talk about today, we're going to reveal things that you should do to protect and
Speaker 4:
3:00
generate enough income, retirement, the travel to live the retirement you dreamed of, not the one you have to settle for at Ron. It's so interesting as we think about change and what happens, the income of the past is certainly not going to be the income of the future. And we have to look at a bunch of your things and you know, people listen to show all the time, Ron, and they're thinking to themselves, well, hey, is that really true? Well I thought it's something interesting I would share with them. And so let's think about people have traditionally always love to go to the store to shop. Well, what's changed? The retail experience and the digital experience for shopping. So I'd just like to share some statistics here with everyone, Ron. So let's think back 10 years ago. So let's go back to 2006 11 years ago.
Speaker 4:
3:44
God, it seems like yesterday it does. So what's the largest retail company in the United States? What do you think? Either Sears or JC penny. Walmart, Walmart. Walmart is the largest, 214 billion of market value. Second largest was best buy and the third largest with Sears. So let's go today. So what is the larger guys in 1983 when I was in high school? What? What do you think it was then? How about JC penny? It could have been chasing, I don't know. I don't have those numbers in front of me. Uh, it probably, it was a company we don't even think about right now cause it's probably gone probably right. Uh, so now, today, what's the largest retail company? Amazon. Amazon. And it's not even close. They were 17 billion in 2006 now, I mean they're approaching 400 and it's just, it's amazing what happens out there. But take Sears. So I think about growing up, going to Sears frequently to buy things.
Speaker 4:
4:41
It was worth 27.8 billion in 2006 and then the last year it was worth 1 billion. $1 billion. That's a 96% drop. And so many people had looked at, I remember the Sears catalog. Do you remember? Absolutely Kellogg as a kid? Yeah. Seasonal change and write up my Santa Claus list. I remember going to the store, that's for sure. And so why do we bring that up today is what worked in the past does not always work in the future. And it's not just about hearing income about bonds and annuities and things like that. Think about what you knew you brought up JC Penney, Ron, it's, it's down 86% over the last 10 years. So we have to look at the future versus the past when we're approaching a income and how he handled it. So I thought it'd be interesting just to share the current statistics. So the average Americans gross household income in 2015 was $71,258. That's the average Americans. So with a 4% wage growth here in 16, it's right about $74,000 the average American has from an income. So then when we get in retirement, Brian is interesting. How many people want to replace it at 100% or do people want it higher or do they want it lower? And often they come to guidance for us for that answer. Yeah. Would they do,
Speaker 3:
6:10
I mean it's, it's, but you have to plan for that, right? It's, you can't just say, I want to generate as much income as I can. Um, but let's take a step back here. Paul. I yesterday, um, I was able to go see the total eclipse, right? And we actually took some stakeholders up and we flew up in and I had an epiphany. It was really cool to see. It wasn't much until it was 100% cause it went from, even if there's 1% left and we had total darkness and we flew the, um, the actual line. And so we had for about three minutes of complete dark. It was such a, I'm going to call it a spiritual supernatural occurrence. It makes you realize just hauling significant, I mean, all of our listeners out there think about, well, think about money and all of this stuff.
Speaker 3:
7:01
And I think sometimes we can lose the sight of the fact that in the grand scheme of things, it's simply a tool. Wealth and money aren't bad. They're not good, they're neutral, right? It's like what do we do with that? And seeing something like that goes, you know, the sun, the moon, the age of the earth, none of that really cares about money. It's just a way of transacting business. And so I think you need to get a mindset to say, you know, what's the kind of life that I want to live without having to live in fear because they say money can't buy happiness. But Harvard's proven that's not true. Um, and we've actually had the professor, uh, I to Omaha, uh, Dan Gilbert to tie all of your pricing. Some of the commercials he's done, but up to about 85,000 of income. It does buy happiness because if you can't provide for your most basic needs, you live in fear of food, shelter, being able to just pay your basic utilities.
Speaker 3:
7:57
And beyond that they've proven it doesn't really buy any happiness. So let's focus on what are the things like, let's not maximize our income, but let's make sure we put ourselves in a position. If we protect the downside, the upside will take care of itself. And you know, a lot of, and I want to go to where we pick on Wall Street a lot because they take advantage of the consumer a lot and we're all about a movement of putting the interest ahead of Wall Street. If you bought an annuity back in the early two thousands insurance companies were making, I'm going to call him stupid bets. They're giving guarantees they couldn't afford, and if you are fortunate enough to get into those, I wouldn't buy one today by the way, but if you were to buy one, then now insurance companies are coming out trying to get out of these guarantees and they're offering cash for people to give up their guarantee. And I think the easy reaction for people to say, I've heard all these bad things
Speaker 4:
8:56
about annuities, I should just get out of it when in fact you want it to be very careful about this because an insurance company or Wall Street rarely is going to do something for you just out of the goodness of their heart. You better believe they're probably getting more out of it then you're getting out of it. And so this was one of those things that protect the downside and annuity. We'll do that. We'll give you a guaranteed income for life and maybe some guarantees. Let's go back and talk about it as a tool, but just don't, don't settle for the option. And without having a competent CPA or financial advisor run the calculations for you. Yeah. And, and the worst part there is wrong. Don't let your advisor make an assumption they should actually run a calculate analysis. Cause most of the time when these buyout offers are coming in.
Speaker 4:
9:46
So if you own an annuity in this buyout offer is coming, you're figuring, hey, if they're trying to buy this for me, that's in their best interest versus my best interest is an annuity holder. And that could be true, but sometimes there could be a rational reason why they are Ron. I agree. And so you have to look at it and you know, we've actually seen this through several of our clients, but they've come to us and said, what should I do? And then we arm them with the information and we try to help them avoid the traps that come with this and give them guidance because it's not just about, hey, what's the offer? Taxes play a huge, huge impact on this, your tax rate. But also your future savings rate and what matters most to you there. So as you have an annuity buyout, you better run the analysis every time because one small lever and that can make a huge decision, no different than you're talking about flying earlier on your flight plan.
Speaker 4:
10:39
I'm sure one degree of course change is not one mile, it's tens or hundreds or thousands of years ago is he puts you way off. Good point. Same Way with your annuity or things. One little percentage change can make a major difference. Yeah. I want to remind all of our callers, you can email us at any time, Ron, at wealth from wisdom radio.com and we'll answer your question for sure. And if it's something we think everybody would be interested in, we will read it on the air and we'll have one coming up from Craig, uh, from DC and our next segment. And just remember anything you want to ask, you can ask. There is no such thing as a dumb question. The only really dumb question is not asking it because I guarantee if it's on your mind, uh, it's on other people's minds as well. And we're talking around income today and it really is a biggest challenge in retirement and the old way used to generate income, the goto options of yesterday, pensions and savings and CD's and you know, bond yields of what the market, not being cheap may or may not be over value, but it's not providing the safety net.
Speaker 4:
11:42
I think it was when valuations were so cheap and oh eight so how are you going to make your money work for you without betting and taking a lot of risk and betting the farm. The good news is we can help we, there's a lot of different options
Speaker 3:
11:54
for generating income. So you've got absolutely nothing to lose. Give us a call at eight eight eight four nine 85 13 that's (888) 419-8513. The last thing you want to be is 80 years old, full of life and flat broke. Like we say, way too much life. If the end of the money, what you will learn about all the options like a turn your savings and investments into income or cows. That's eight eight eight 41985138884 nine 85 13 or again, email is wealth from wisdom radio.com that's wealth from wisdom radio.com how are you turning your savings and investments into the income in retirement? We're going to continue to talk about what your options are and we've got great questions from our listeners. We're going to feel the next segment. I'm Ron Carson with my cohost Paul West, and you're listening to wealth from wisdom,
Speaker 2:
12:48
trust, transparency, accountability. These are the values that drive Ron Carson and Carson wealth. You're listening to wealth from wisdom with Barron's hall of Fame Advisor, Ron Carson. Is it possible you could pay fewer taxes in retirement and keep this money for yourself? You could learn right here and right now, unwelcome wisdom with Barron's hall of Fame Advisor Ron Carson. It's a three Molson
Speaker 3:
13:14
words you'll ever hear in retirement and you guessed it. It's not location, location, location, it's income, income, income. Welcome back. You're listening to wealth and wisdom and I'm your cohost Ron Carson with Paul West. Your ability to turn your savings and investments into income. We'll totally dictate what kind of retirement you have and it could mean the difference between doing anything and everything you dreamed of versus pinching panties are just getting by or worse yet running out of money. Coming up. We're going to continue to talk about what your options are in savings and investments and how do you turn your income into an income workhorse in retirement. You, Paul, we did have a question from, we have several questions. We're going to feel the here today. We have one from my Craig in d c and he just simply said, hey, I think I should get a second opinion.
Speaker 3:
14:04
Um, with my financial advisor, it's not that I'm happy, but I'm really not very happy as well. I think this is a common, a common question is people are like, I don't want to go from the Philip. The skill to the frying pan. Why do I go through the pain of change? Just to get the same thing that I've got. You know, we are in I think unprecedented times today and you want to make sure, and we've talked about a wealth from wisdom, make sure you've got a team does it will never cost you any money to get a second opinion. Um, but really dig deep and say what are the difference makers? You shouldn't make a lateral move if you're not going to really get something that's different and unique and look for a rounded out team and look for people that will do the heavy lifting and do things that are nontraditional, nontraditional types of investments, um, that can help you income in this
Speaker 4:
14:52
environment. Yeah, it look for, look for value. I don't mean value investing around, I mean value from the advisor. They're giving you more than what the person was before. And I think you have to look at, do they have a team of people? Because in today's world, going to one individual advisor isn't gonna make a lot of sense because the complexities of today's world get that much more complicated. And so when you think about this, you know, my story would always be when I want to go get help. I know there's somebody that always can individually help me, but I'd rather go to someone who has a team of people because if I'm going to be paying for value, I want multiple people working on this just for my own personal protection. I don't want to, like you said, go re-explain this again and again and again.
Speaker 4:
15:36
So one of the first questions, one of the pain points you need to avoid, one of your first questions is if, if Greg is going to come look, talk to another advisor, ask them number one, are you a fiduciary? And if they can't answer that right away for you already, you should have a warning sign up. Uh, if they're going to be looking out for your interest or your own. And when I just saw this the other day. So since the Department of Labor's come out and been in more impactful of trying to create more fiduciary is by the way, which we've been a fan of, you know, for many years here because we think it's always, always do what's best for your clients. Everything works out. So you know, it's trending up now in terms of a financial products, in terms of sales, no life insurance. Okay. Because it's not held to the same standard. And so people who are not fiduciaries are selling more of life insurance. And now it makes me wonder are they doing that because that's not in the client's best interest or not be because they don't have to be held to the same standard as you would be as an advisor. And I think it's an interesting trend that people still will try to sell you something. So that's why you got to ask
Speaker 3:
16:47
for them. Yeah, no, I agree. 100% it's like, you know, be a fiduciary. They have to require by law, have set on your side of the table. Let's talk about a couple other income solutions here, Paul. Today, I mean the 10 year Treasury is actually lower than what it was the beginning of the year. Beginning of the year, it was 2.43 today it's 2.19 longterm rates have come down. That's a forecast that even though short term rates have come up, long term rates are actually forecasted right now. The tenure to actually stay flat or decline, if you'd say that's not possible, just look at Japan or some of the sovereign debt around the world. It has negative yields. You can do a bond ladder. So let's say you think, hey, rates are going to go on. I don't know. They're going to go up, down or stay the same. You're going to actually do a Muni or a corporate bond ladder that you don't have to guess. You can get substantially better income then you get right now in a CD or savings account and these things will continue to mature and actually automatically roll over. So a bond ladder is, I think, a much better solution. This just sitting in cash today.
Speaker 4:
17:46
Yeah, it absolutely. Ron, so I mean, think about it, if you're in a one year today and say you saved $500,000 for retirement, you would be getting approximately $650 a month. Is that enough for you to live on? Probably not. But you think it's safe. It's in a bank, it's in a CV. However, most people, that's just not going to suffice. And so you have to look at other options and people have said, hey, there's been a big run in the fixed income in the bond market. That's okay if you manage the risk by laddering up by different years. So ladder means one year, two year, go out as far as you want. But that de risks, some of the interest rate increase that could happen here. And it's a great way for you as an investor to help protect that income stream. And I think people appall draw a false sense of security.
Speaker 4:
18:36
They say, well the say a bank or a short as safe you gives you the certainty of running out of money versus some uncertainty of having a chance. And there's some things you can do that are very, very conservative. The other was they were replaceable. Capital strategies. Look at strategies that aren't designed just to go up when the market goes up. It's strategies that are designed to generate income and almost in a kind of market environment. Yeah, it makes a big difference. I was sure and with you Ron, uh, that I was talking with a client the other day and he said, hey, for a one year CD he's getting a little over 1% but to get a 10 year CD it was barely over two and I just, I can't imagine saying I'm going to go 10 years of my life earning 2% inflation is going to get you just average cost of certain things.
Speaker 4:
19:28
He of having that money lose purchasing power is really is really the key or ball change direction. Just slightly here. Here's an interesting question from grace and Middletown, Ohio. She says, I have a decent pension from my deceased husband at about 450,000 in mutual funds. My kids say and she says, I'm living comfortably off that my kids say I should now give them the money so I can see them enjoy it. It's like that's not a lot of money to be given away. And I understand you want to see your family enjoy it, but if I've got a $450,000 nest egg and not knowing we're going to talk about longevity risk, I mean people were starting to live a heck of a lot longer. I don't think so. Grace, I mean there's no tax benefits to that. They're going to get it when you're gone, but I think you should continue to use it as long as you're going to need it.
Speaker 4:
20:19
Yeah. Well, is there some safety net we don't know about? They're wrong because why would she take that? Just the pension. Yeah. Yeah. I'm assuming she gets it. She doesn't say so I'm swimming. She gets social security. I mean she's, whoa. She can do some potentially some gifting techniques that could help out taking advantage of the annual gift tax exemption. So if you're doing your own taxes, you're not aware of what that is and how much you can contribute a gift tax free to your client. You know, please talk with a professional. But that's a way, but why give it all away now? And I, yeah, you want to watch your kids enjoy it, but it's also you got to protect yourself because the last thing you want to be doing is going back to them. Say, ah, I need my money back, or I need you to help me because I bet I'm to, I probably be assured there Ron, at some point the money's not going to be there.
Speaker 4:
21:03
They're going to invest it or do something. Which actually brings me up to a hot topic currently the lottery, so mega millions and powerball. Some of those had been getting extremely large lately and we can ask frequently from people, is it a good investment? And of course laugh a belly. I've been at closing. That's really gonna happen. I'm like, well, just read the odds on the back of it. But the question they do ask is, Paul, if I won, what should I do? Should I take the lump sum or should I take the multi year payout? And it's interesting Ron, I mean I've heard all schools of thought and end of the day I like it that they're getting advice from even one. Yeah. Yeah. I think when I tell people is the $2 they spend on the lottery ticket, the dream and the enjoyment and they get on that $2 spend is probably worth it compared to how they spend other dollars.
Speaker 4:
21:55
Uh, but I said if they get in that situation, the, the professional help they're going to need on the financial, the legal, the tax is so out of the stratosphere there they're used to working in today they just wa if lightning strikes, which by the way, you're more likely to be struck by lightening then when one of those mega lotteries, I agree, I agree. I think people should focus on other things, right? Because it's such a long shot. Let's, let's talk about things you can do. So there's some pain and consequence if you don't do some of this planning. One is, is we talked about it before. What's your best case scenario? Everything goes perfect, but what if? What if your income gets cut dramatically for whatever happens, right? We had Enron go out of business, let's pitch him. Plants just went away. I think we're going to see bankruptcies in the future occur much faster because technology's going to continue to disrupt much faster.
Speaker 4:
22:52
In the past, you've talked about Sears, JC Penney, humash. If you had, you know, or Kmart, you know, there's another large retailer. That's really a thing of the past is what is the minimum amount that you can live on and know that you can go there and have a contingency plan for what that looks like. Not if it happens, but before it happens. Yeah, you have to run. So it's always think about what's the worst case scenario? Why do you buy insurance for your home? You want to make sure you're protected in that you've got a home replacement or a car replacement. But what do you must've us ensure for the Ma the minimum amount for replacement value that we can make it. And I think we have to look at her own personal income the same way. I mean, I think about this right now. If you cut your income in half, could you live? Could you live the way you want to run? I mean, and I think right now if everyone said, took the number, what are you making month? And
Speaker 3:
23:46
if you cut that in half, could you live? Could you sustain? If you couldn't, then you better figure out a way to protect yourself in case something like that ever happened. And we're really not. Don't cut it and say, is that the one you want? But could you live with it? Because we want to know what the worst case scenario is. And on that, along those lines, have you ever wondered if you have the right financial advisor and are they covering all your, your individual basis? Um, if you could find someone to do a better job, would you, because trust me on this, if you're hanging onto the wrong advisor today and they're not creating value for you, you're just getting just one piece of the retirement puzzle. You're going to be the one that suffers a pain and consequences and you're going to be the one that's going to have to pay for it.
Speaker 3:
24:28
By the time you figure it out, it's going to be way too late to do anything about it. We owe it to yourself, to your family, get a second opinion. Also making sure their fiduciary proof to you. There are fiduciary. We actually have a five step master plan. We address all the critical components that will help your money go further. Very specific. Five step master plan will dress all the complicated components and the critical, we'll make the complex easy so you really understand where you're at and what all your options are. Give us a call. (888) 419-8513 that's (888) 419-8513 Paul and I are talking about income things you should do, how to generate that income. It's going to totally dictate your lifestyle in retirement. We're going to cover more of these ideas on our next segment. I'm Ron cars off my cohost, Paul West, and you're listening to [inaudible]
Speaker 2:
25:21
in some ways. He seems good times and bad times and he's got the gray hair to prove it. You're listening to wealth from wisdom with hands held the same advisor, Ron Carson, he's a published author and he's been featured in Forbes, investment news, the Wall Street Journal, CNBC, and more. Now back to wealth from wisdom with Barron's hall of Fame Advisor Ron Carson. How was it that two are tired couples who are exactly the same age, they saved
Speaker 3:
25:47
same amount of money, yet they're living two completely different lifestyles in retirement. One of them is just living it up while the other one's just barely getting by. How can that possibly happen? Welcome back. I'm Ron Carson for my cohost Paul West, and you're listening to wealth from wisdom. The difference between these two couples, one had a plan and an income strategy and the other one didn't. Coming up. We're going to continue to talk about how you can plan for retirement to make sure you have plenty of income coming in and Paul, one of them is I think a lot of people run from illiquid investments and illiquid investments should probably consume some portion of your portfolio because you get such a premium of return or you should get a return premium for being in an illiquid investment. A and B, it's also nice because you're not watching it fluctuate. Think of your house as an illiquid illiquid investment. You know, it tends to go up in value yet you don't have a price of it in the newspaper,
Speaker 4:
26:45
so it gives you some mental stability as you think about your portfolio fluctuating. Yeah, I always define illiquid is something that you cannot get out of in the next three days. I mean that's really something that I deem as the illiquid and for many people, I'm not going to say what the right number is. Some people it's 5% of their net worth, some it's 10 some is 20 it just depends on what's important for you. But a lot of times these ill liquid or specialty type vehicles can generate a good income because they are not invested directly in the stock or equity market. They have other investments that they make that can often return a nice dividend or yield. And I think for a lot of people that just rounds out your entire portfolio because this is a good way for you to have some non correlated risk to the market and non core.
Speaker 4:
27:34
The rest of your other income streams because I just read this round, I think it was fascinating. The average sale securities, um, retirement benefit for every American is $1,363 per month. Most people, again, if you're listening, could you live on $1,363 a month? Probably betting. Most people can't. So you have to have multiple sources on what you receive from your income because there's challenges you're going to approach by having singular income sources related to this. So I got a question that came to me, Ron, uh, directly via email. And this was Mike from Baltimore and he said, Paul, I've been invested in the s and p 500 in an ETF for the last four years and it's in my taxable account. I've made some good money but I want to retire soon in the next two years. What should I do? And I think it's interesting because I think what he's asking us here on is I've made money.
Speaker 4:
28:34
Should I sell or not and have to pay taxes? I think you're right. There's a question within the question though, right? Yeah. Cause it's, hey, I, I think many of you that do it on your own and investing or are struggling with this right now because you're a little fearful of what's happening and potentially in the markets, what's happening in the political world, what's happening internationally and when's the right time to pull the trigger. Because I tell everyone this and many of our CPA friends across the country would agree pain taxes is an okay thing if you've made money and you have to realize that because holding something until it goes back down to where you bought it, that wasn't why you bought it in the first place. You bought it to earn something. So paying taxes. Okay, so I would tell Mike, if he's got concerned and he's managing money himself about the market, take it out, pay the taxes. That's a win in my book. Ron, he, he's made something. He is further ahead than he was in the past. I think that's great advice. I mean people make short, bad decisions, short term, bad decisions because the tax ramifications and you need to be thinking, you know further ahead than that. Here's a question from don from Pittsburgh. He says, have most of my money
Speaker 3:
29:43
in a Muni bond portfolio that I purchased in 2008 most of the bonds are yielding some between six and 5% which was a great yield. Absolute, especially you compare what it is today. He says, it's a, I'm living comfortably off the income, but an advisor says it's a very risky portfolio. Can this be possible? And I think what the is probably saying is these, even though they're getting those bonds are paying five, this is misunderstood, right Paul, you bought them a five or 6%. Let's say you paid $1,000 for the bond or five or 10,000 it's keep it simple. $1,000 that bond is not worth a thousand today. It's probably worth, uh, PR, probably 1200 1500 you're a big premium because the bond will go up to give you whatever. If you were to sell that bond, what the current yields are today, if you're taking, he doesn't say what the quality is of high quality Muni, you're looking at maybe two, two and a half percent, maybe 3% today.
Speaker 3:
30:42
So those bonds to find out how many years are left and if rates start to go up, so he's really not getting five or six. He's getting much less than that. When you adjust what the portfolio's really worth. Now the opposite is true. If you buy a two or 3% bond today and rates go back to five or six, you want to sell out of that bond, you're going to, you're going to take a big loss on that bond portfolio. So I think I understand what the advisors saying. I don't think it ever makes sense to have, he says most of it is in a Muni bond portfolio. I don't think it ever makes sense to have everything invested in a single asset class.
Speaker 4:
31:16
Aaron, there's a lot of people that come to us and want advice and we're going to give him advice so they can make the right decision. And many times thing, I want Muni bond because it's tax free, but the reality is based on their tax bracket, buying a corporate bond that pays a lot more, your tax effective rate is actually higher than a Muni Bond. So you have to go figure out what is absolutely in the best interest for you and what works there. So when I was thinking about this in prepping for today's meeting, I mean as we think about income planning for people across the country, there's really four main things you need to think about. One, how long are you going to live? So you get, you have to think about that part was that look like to what do you want your lifestyle to be?
Speaker 4:
32:01
How much do you want to enjoy? How much do you want to save? What level of spending do you want to feel? Three, go back to the question I had earlier on. Legacy, when do I want to give him the money to my family or am I going to have enough to give money to my, my family or a charity or a foundation? And finally, how liquid do I need everything to be so that I have some form of safety. So those are some of the big tenants of income planning that you have to think about,
Speaker 3:
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about in the legacy thing. Do your estate planning? I mean right now I've got two families that are just bad. The kids are battling each other, you know, over money. And it's really ugly. I mean, everybody's suing everybody else. It's like, man, you know, I think, I think one of the worst things you can do is leave your kids a lot of money. So maybe planned, Yogini. And I have decided most of our money's going to our foundation. Our kids will be able to be part of giving it back to society and giving it to the community. And that's not for everybody. I understand it. But what we didn't want to do is create something where the ugliness that I've seen transpire among loved ones who swore they never would. So really put some thought into the estate planning and what age you want to make the money available to the kids and, or is there something, a legacy you wanna leave something good you can do that's near and dear to your heart, um, that can, you know, maybe really leave this world a better place than you found it.
Speaker 3:
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Yeah. So I think one of the traps we see families fall in is also the lifestyle trap. Hey, spouse or friend, stop spending so much on golf or stop going to play tennis. So much or we don't need to go out to dinner so much or they got, they got the handcuffs on so tight that they don't spend anything because they're so worried about their lifestyle and protecting it and having money and not having to worry about it, that they're equally sitting there and they should actually be spending a little bit more. I mean one of my favorite things to do is when people come in and they want a second opinion because they're in a trap of Tufts spousal conversations is you can spend more money. It's okay. And it's funny to watch their faces are on because they're, they're stuck there in that paralysis of thinking they can't, but they can and vice versa.
Speaker 3:
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If they're spending too much, you need a coach or someone telling you stop, you got to slow down in order to make it the whole way. I agree. Not Spending enough. It's just as bad as, as spending too much. You know, you want to, you want to have some balance there. Do you take a summer vacation of, so you probably spent more time planning that vacation then you did. How you're going to get income from retirement, right? We can help you get back on track with our five step income action plan. This customized plan will cover areas that will help generate more income from your portfolio. This initial analysis will not cost you anything, so you've got absolutely nothing to lose. Give us a call. (888) 419-8513 you'll get straight forward answers. We make the complex simple advice and a common language and an effective game plan.
Speaker 3:
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Give us a call today, (888) 419-8513 that's eight eight eight four nine 85 13 or email us if you have a question. Ron and wealth and wisdom, radio.com it doesn't matter what the topic is. You may be something about social security or how to generate income in retirement or the best way to withdraw my ira or 401k. Another biggie that you can leave a lot of on the table if you're not careful. If you've lived to celebrate your hundredth birthday, could you afford it? Coming up next. We're going to continue to talk about how to protect yourself and how to generate income. I'm Ron Carson with my cohost Paul West, and you're listening to wealth and wisdom.
Speaker 2:
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How could you make your money go further in retirement? Learn how next unwell from wisdom with Barron's hall of Fame Advisor Ron Carson, he's a published author and has been featured in Forbes, investment news, the Wall Street Journal, CNBC, and more now back to well from wisdom with Barron's hall of Fame Advisor Ron Carson. Show me someone who's afraid to spend a nickel and retirement,
Speaker 3:
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shall we? Someone who lives in constant fear of running out of money. And I'll show you someone who does it, have a plan, and they certainly have a dearth diversified strategy on how they're going to generate income. Welcome back. I'm Ron Carson with my cohost Paul West, and you're listening to wealth from wisdom. There are significant headwinds facing anyone that's trying to generate income in this environment today. The good news is you have options, but they take some effort and some planning in order to maximize. I'm coming up on our final segment. We're going to continue to how to protect the downside and let the upside takes care of itself and some nontraditional ways to generate income. And Paul move right into another idea is a reverse mortgage. I mean, be careful. Understand the fees, the costs, what you're getting into. But that's an asset class that if your house rich and you want to see you have a lot of equity in your house, it is an option that I certainly personally, if it were, I think it would be a lot my last income source. But I would, I would look into it now and I didn't need it to know that's a bucket
Speaker 4:
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of income that I could turn on era. Ron, actually, we had a collar into the show a couple of weeks ago. His name was Ron also. Andy had that exact question. He said, Hey, uh, I'm 78 years old. I got, you know, several hundred thousand left to live, immerse in my life. But I've got my house completely paid off and I want to start gifting money to my knees and what should I do? And so one of the strategies we talked through, one, he has enough income sources coming in through social security and it's several hundred thousand he doesn't need anything else to live on. So, but he's like, I want to give money now, but I'm afraid to spend that couple hundred thousand I have and peeling off part of it to give to his knees. So we said, well let's set up a reverse mortgage for you because that may be a way you can start giving now and taking advantage of they'll ill liquid equity you have, which is in the value of it,
Speaker 3:
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your hall. And I think a lot of people think, oh, someone's going to sell my house where I'm living. That's the beauty of a reverse mortgage as you get to stay in the house until you die. And then they sell it, they satisfy the debt. If there's anything leftover that would go to wherever you, whoever your beneficiaries are.
Speaker 4:
38:32
Yeah, it's a simple white, but it's not always right way for people. So don't fall in the trap and think I need money so I'm going to do a reverse mortgage. That's not always the right thing. It's an option. It's a tool like everything else. And Paul, let's talk about the family index number. This is a number of people like what's the s and p doing or what this index, the only index that matters is your family index. For Paul, it's a West family index. For me it's the Carson family index. What through planning, what's the number we need to hit as a family to hit our goals and our objectives to adequately use this tool we call wealth and money to protect our downside and make sure that we're going to continue to live the life that we planned to live. And then you may run another index number is what if I really cut things as low as I possibly can?
Speaker 4:
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What's that number? But knowing that number I think gives people tremendous peace of mind. It allows them not to make short, bad decisions, short term, bad decisions because investor behavior is going to drive performance, not the market, believe it or not. You can look at all the research out there. It's how you react to the market. That's going to dictate how you do. Yeah. So when I would say don't let the following happened to you. So what do you do when you're talking about your performance and your accounts? You often compare it to a friend or you ask somebody in your backyard, you're at a barbecue. How did you do last year? What's happening? Well, you're not asking them is how much risk are they taking on or what have they done? And I shared with you this story the other day, Ryan, I'll share it here on air, is a common connection.
Speaker 4:
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And a friend of ours sent over their portfolio and wanted us to look at it and said, Hey, I think I've done pretty good. Uh, we are able to run a risk analysis and send it back to him so he could make the decision. I didn't want them to feel like we were telling them and them this, but he's taken on 1.4, so 140% of the risk of just the overall style. A hundred and pounds. How old's his person? Uh, mid sixties. Okay. And is he's like, well, hey, and he's not even at, by the way, market base returns, so that's even scarier. So he's taking the risk and not getting the returns. Yes, but what we're seeing now happen is people are taking all this risk and they don't even know it and so they're willing to do that, so don't let that happen to you. You got to understand how much risk you're taking is, it's no different than I say about when you go to a swimming pool and you can choose which diving board you want to jump off of, choose which level you're most comfortable with and right now people aren't going off the high dive when they don't need to be doing that.
Speaker 4:
41:01
They can stay on the low spray with no water in the pool, normally a footer on her, right, not enough for them. Here's a great question from Clyde and you're going to love this one, Paul from climate in DC. He says, I've been talking to a financial adviser about rolling my 401k into an indexed annuity. She says it will give me upside with no downside. She also says a stock market will probably crash. Sue someone making a forecast. So I was like a little bit of a scare tactic. Seems too good to be true. Please advise. Well first of all, um, fixed annuity or an index annuity is a general liability of the insurance company to you can't get something for nothing. So your reaction Clyde, it seems too good to be true. It is tons of fees, expenses you don't see, I would not even consider this as a, as a real option.
Speaker 4:
41:56
Yeah, right. I mean we've, we've run a lot of analysis and it just, it does not make sense for very many people. And I love the sniff test. When does it an index annuity? A rare occasion when there is an a you and I've had one a couple of years ago where it was the only viable solution for a client just because they didn't have exposure to anything else and they needed some income. But uh, there was no other low cost almost out of the fixed annuity or an index annuity. I have to think that was a fixed, it was a fixed annuity. It was, you know, I think there's a difference because it promises this, you're participate in the upside, but you're not going to take any downside risk. And if you, if it seems too good to be true, what your parents told us growing up, it probably most certainly is.
Speaker 4:
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Yeah, no, you're, you're definitely right. So one last question. This was actually carry from Omaha. He said, this was the question the other day. Hey Paul, I'm saving money in my retirement plan. Um, we've got several children and I want to buy land because we want to hang out with them. We want to fish, we want to have a good time with them. Is this a good decision for my family? And my response back was, well, it sounds like first of all, you're going to have enjoyment. So I call that the lifestyle goal. The emotional return. Yes. Yeah, absolutely. It goes along with it. Um, and said, well, Hey, I'm not sure if my spouse is on board or not with this yet. We've got to have a conversation. I said, well, have that conversation first. Because if they, if things aren't good at home, like we all talk about, and you're not both aligned with this decision, you're going to create more financial strife than that financial investment is worth.
Speaker 4:
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So I always say your income plan is both quantitative and qualitative. It's both the quantitative is your numbers. Qualitative is your level of enjoyment. We call it satisfaction. I live phrase, I've heard you say in her, well, run, return on psyche. How much are you getting for what you're investing in? Sometimes you can have these kinds of places and the government will pay you to idle the ground. You can actually make an okay return on it. Uh, but that brings us into the need to create a financial plan overall, taking into account taxes, social security, everything we've talked about today, and you're going to need some help, but who you going to trust? And I don't want this to come across wrong, but we're good at what we do. We, we put the clients' interests first. We worked backwards. We've got great team here. Um, and what others have said is we're number two independent advisor in the country according to barons were selected as one of the America's top advisers by Forbes. We've the firm's published four books, including two New York Times bestsellers. We have great subject matter experts from attorney, CPA, CFP
Speaker 3:
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is all working on your team for your benefit. So I'll put our resources and our brain power up against anybody in the country. We're good at what we do. We're humbly confident. Give us a call to schedule a second opinion or an analysis on what you're doing at (888) 419-8513. It won't cost you anything, so you have absolutely, positively nothing to lose. But if you don't pick up the call, you're going to suffer the pain of consequences of not being with as good a team as you could possibly be with eight eight eight four nine 85 13. Call today, eight eight eight four nine 85 13 I'm Ron Carson or with my cohost Paul West. And you're listening to wealth from wisdom
Speaker 2:
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risks, social security, income taxes, estate planning. Every week we talk about how to make your money go further in retirement right here on wealth from wisdom with Barron's hall of Fame Advisor, Ron Carson.
Speaker 1:
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Okay. And here's the legal Mumbo jumbo. The opinions voiced and wealth from wisdom with Rod Carson or for general information only, and are not intended to provide specific advice or recommendations for any individual to determine what is appropriate for you. Consult a qualified professional. All indices are unmanaged. I may not be invested into directly. Investing involves risk, including possible loss of principle. No strategy assures success or protects from loss. Past performance is no guarantee of future results. Advisory services offered through CW m l LLC, an SEC registered investment advisor.